Voluntary exchange is the act of

buyer Procurement is the method of discovering and agreeing to terms and purchasing goods, services, or other works from an external source, often with the use of a tendering or competitive bidding process. When a government agency buys goods or serv ...

s and

seller Sales are activities related to selling or the number of goods sold in a given targeted time period. The delivery of a service for a cost is also considered a sale. The seller, or the provider of the Goods and services, goods or services, c ...

s freely and willingly engaging in

market Market is a term used to describe concepts such as: *Market (economics), system in which parties engage in transactions according to supply and demand *Market economy *Marketplace, a physical marketplace or public market Geography *Märket, an ...

transactions. Voluntary exchange is a fundamental assumption in

classical economics Classical economics, classical political economy, or Smithian economics is a school of thought in political economy that flourished, primarily in Britain, in the late 18th and early-to-mid 19th century. Its main thinkers are held to be Adam Smith ...

and

neoclassical economics Neoclassical economics is an approach to economics in which the production, consumption and valuation (pricing) of goods and services are observed as driven by the supply and demand model. According to this line of thought, the value of a good ...

which forms the basis of contemporary

mainstream economics Mainstream economics is the body of knowledge, theories, and models of economics, as taught by universities worldwide, that are generally accepted by economists as a basis for discussion. Also known as orthodox economics, it can be contrasted to h ...

. That is, when neoclassical economists theorize about the world, they assume voluntary exchange is taking place. Building on this assumption, neoclassical economics goes on to conclude a variety of important results such as that market activity is efficient, that free trade has net positive effects and that markets in which economic agents participate voluntarily make them better off. Notably, neoclassical economists—baseding the assumption of voluntary exchange—deny the

Marxist Marxism is a Left-wing politics, left-wing to Far-left politics, far-left method of socioeconomic analysis that uses a Materialism, materialist interpretation of historical development, better known as historical materialism, to understand S ...

definition of the

exploitation of labour Exploitation of labour (also known as labor) is a concept defined as, in its broadest sense, one agent taking unfair advantage of another agent. It denotes an unjust social relationship based on an asymmetry of power or unequal exchange of value be ...

as a possibility within neoclassically defined

capitalism Capitalism is an economic system based on the private ownership of the means of production and their operation for Profit (economics), profit. Central characteristics of capitalism include capital accumulation, competitive markets, pric ...

Marxian economics Marxian economics, or the Marxian school of economics, is a Heterodox economics, heterodox school of political economic thought. Its foundations can be traced back to Karl Marx, Karl Marx's Critique of political economy#Marx's critique of politic ...

, one of the major alternatives to neoclassical economics, contends that the exploitation of labor is both possible with voluntary exchange and a definitional condition of the capitalist mode of production, among other

modes of production In the Marxist theory of historical materialism, a mode of production (German: ''Produktionsweise'', "the way of producing") is a specific combination of the: * Productive forces: these include human labour power and means of production (tools, ...

. According to Dr Marianne Johnson, there is no theoretical basis for arguing that partially or completely voluntary exchange is preferable to other arrangements such as government mandates. Voluntary exchange is sometimes at the root of arguments about the morality of markets. Market proponents often invoke what they believe is the morality as well as the supposed efficiency of voluntary exchange to argue against government mandates, including many forms of taxation. The morality of markets, even those rarely adhering to true voluntary exchange, are nonetheless in dispute.

References

Free market {{economy-stub